Holding the Thread on Pension Stipends

This idea of giving government retirees a stipend in years that they don’t receive cost of living adjustments (COLAs) to their pensions seems to me a much more dangerous one than it might appear on the surface:

In legislation debated in a House Finance Committee hearing Tuesday night, Reps. Robert Craven, Michael Morin (a retired firefighter), Carol McEntee and Justine Caldwell propose that “an increasing stipend″ be paid retired state employees, municipal employees and teachers or their beneficiaries in years when there is no scheduled cost-of-living adjustment. …

Starting in the year that begins Jan. 1, 2020, the legislation would have the state pay a 3% “stipend″ on the first $15,000 in pension benefits, a boost of up to $450 initially, in each year in which there is no scheduled COLA payment.

In 2022, the stipend would increase to 3% of the first $20,000 in pension benefits, up to a maximum of $600 a year, and in 2026 it would increase again to 3% of the first $25,000 in benefits, up to a maximum of $750 per year.

Starting in 2030, the proposed increases would be tied to an annual index.

The pension system is a fund into which the employee and the employer pay throughout his or her career. The supposition is that those contributions will be enough by the time the person retires to cover his or her retirement with no further additions. If the system is not working, adjustments should be made within the system or funding increased to the system to shore it up.

To take the approach of adding some additional direct payment to the pension plan’s members is, in principle, no different than having the state pick any group of people and start giving it money. As a practical reality, that happens all the time — far too much — but this legislation would cross another line and destroy the principle that government shouldn’t do such things. A lingering sense of propriety may be all that’s holding our government together at the moment, and it’s a thread that shouldn’t be cut.